Another day brings another record for bitcoin. On February 21, the first cryptocurrency hit its all-time high, reaching $58,332.
Bitcoin continues its solemn rally, hitting $58,332 on Sunday. Since the beginning of the year, the rate of the coin more than doubled. And this is the result in less than two months.
There are several reasons for the growth of bitcoin: the arrival of institutional investors in 2020, investments in bitcoin from Tesla and the words of Elon Musk about his interest in cryptocurrencies.
Coupled with the economic consequences of the coronavirus pandemic, this triggered a surge in demand for cryptocurrency from both retail and institutional investors seeking to hedge risks associated with high inflation, which, in turn, is associated with quantitative easing programs and support for national economies in connection with the Covid-19 pandemic. Nevertheless, currently, the key indicators do not suggest an impending jump in the inflation rate.
Although the powerful growth of the bitcoin rate began less than a year ago, during these months, cycles are visible when growth slowed down, and when, on the contrary, it significantly accelerated. The start of the current growth cycle dates back to early February. It was then that the electric car manufacturer Tesla announced that it had acquired $1.5 billion worth of cryptocurrency. Following Tesla, the information field was fueled by the announcement of MicroStrategy that the company is planning another issue of bonds to raise $1 billion in order to attract capital for cryptocurrency purchase.
However, the bitcoin price failed to hold on to the peak values. By the morning of February 22, it had dropped to $55,000.
“It’s becoming increasingly difficult for the bitcoin naysayers to continue with their decade-old narrative that bitcoin will never be utilized by traditional … financial institutions,” Dave Chapman, executive director at BC Group, told CNBC’s “Capital Connection” on Monday. “Frankly, I’m not sure how much more evidence one needs to conclude that bitcoin isn’t going away.”